There’s no doubt about it, times are tough in the midstream gasbusiness. Depressed NGL prices and unfavorable margins have kept atleast one player from selling its assets while the same factorscaused another to seriously rethink the wisdom of a recentpurchase. Executives and analysts predict a lot more horse tradingof properties as companies look to rationalize assets and buildpositions for better times (hopefully) ahead.
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Chalk up another Gulf storm as more sound than fury with a onlya short-term impact on the cash market. Even as Tropical StormFrances caused heavy flooding along the Texas and Louisiana coastsFriday (preventing a number of Houston traders from getting to theoffice), prices were flat to down a nickel or so at Eastern points.Sources said much of the softness Friday, following on average10-cent increases Thursday, was based on the belief that much ofthe Gulf production losses would be moderating over the weekend.
Friday was a day of tests at the New York Mercantile Exchange.The market pushed lower on the open to test support at $1.81 onlyto rebound in the hopes of knocking out resistance at $1.875.However, both attempts failed and the September contract was leftto close at $1.833, almost unchanged for the day.
FERC disregarded the objections of Viosca Knoll Gathering andwaived guaranteed future revenue regulations to let a DestinPipeline expansion go forward last week. Destin plans to construct31 miles of pipeline from a platform at Viosca Knoll Block 900 to atie-in with a Destin lateral in Main Pass Block 279.
The FERC majority has approved a settlement that not only givescustomers on Texas Gas Transmission lower rates and refunds, butalso clears the way for NorAm Gas Transmission, a non-shipper andpipeline competitor, to have an evidentiary hearing on a number ofrate-related issues contained in the agreement. Commissioner LindaBreathitt dissented in part, saying the ruling set a dangerousprecedent for other rate settlement cases.
Except for a couple of Western regions, cash prices Mondayfailed to realize the strong post-holiday recovery from Thursday’splunging numbers that sources had expected. Weakness in the futuresscreen acted as an obvious drag on Eastern prices, which weremostly flat to less than a nickel higher. And one trader felt thelarger upticks in the Rockies and San Juan Basin and at theCalifornia border were more a case of “them being so weak justprior to the holiday” than any great strength in Western markets.
Portland Natural Gas Transmission System (PNGTS) and Maritimes& Northeast Pipeline, L.L.C. (Maritimes) successfully crossedthe first major engineering hurdle in constructing their jointpipeline facilities, which represent the southernmost portion ofeach company’s pipeline system. The joint facilities eventuallywill bring more than 600 MMcf/d of Canadian gas to New Englandmarkets.
Technically, you could call Tuesday’s price action at the NewYork Mercantile Exchange a rally. Not only because the spot Maycontract rose 9.2 cents to $2.561, but also because the marketmoved on strong technical buying. “Funds got back in the market ina big way,” a trader succinctly surmised, referring to an estimatedvolume figure which came in at more than 100,000 contractsyesterday.
A story titled “NGC Releases First Batchof El Paso Capacity” in the Tuesday April 7 edition of NGI’s DailyGas Price Index mentioned only one of two El Paso capacity packagesbeing released by NGC Corp. NGC is releasing the 593,122 MMBtu/d firmcapacity package through the end of April, but also is releasing thesame quantity with the same delivery and receipt points for a muchlonger term: May 1 through December 31, 1999, which is the end of thecontract term for NGC.